Volatility Trading Digest: Volatility Opportunities

Posted May 10th, 2010 by Ivolatility in Trading & Analysis

Vol Opps

For those who may be looking for long ideas after the sell off here is a relative strength idea from the Options Data Analysis and Rankers & Scanners sections of our home page. These Stock Trend Analysis ideas are presented as a regular feature. The selection criterion includes an Exponential Moving Average, Relative Strength Index and the Chaikin Money Flow indictaor and more.

DIRECTV (DTV)
DTV provides digital television programming in the United States and Latin America.
On Thursday before the marketís wild gyration DTV reported better than expected earnings of .59 per share compared to expectations of .45 with 14.4% revenue growth. With a current Historical Volatility of 22.63 and an Implied Volatility Index of 34.80, here is an interesting directional bull call spread as a trend continuation idea.

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RT Options Scanner
Next, we ran the options scanner using the top 200 stocks by options volume scanning for call volume greater than 2000 contracts with implied volatility greater than 40. The results listed in call/put ratio order include several company symbols featured in recent posts. The strategy is based upon a consolidation pattern forming in the broad equity indices.

Takeover File

Fidelity National Information Services Inc. (FIS)
Jacksonville, Florida based FIS provides banking and payments solutions.
A group of private equity companies, including the Blackstone Group, Thomas H. Lee Partners and TPG Capital, is in talks to acquire Fidelity National Information Services. Unidentified sources said a buyout deal remains more than a week away and cautioned the talks were continuing and might still collapse.

With a current Historical Volatility of 34.70 and with an Implied Volatility Index Mean of 59.94, up 19.57 on Friday and up from 28.35 last week the put-call ratio is a very bullish .1, or most all of the options volume was calls. Here is a put sale idea.

There is good edge in this put sale and there appears to be good support at 25, but if you consider this strategy, be prepared to take the stock by assignment if the deal does not go through.

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